Changes to syllabus after 1/25/10 are written in a green font
Security Analysis: BUS-432
Course Syllabus—Spring 2010
Instructor: Stephen P. Huffman, Ph.D., CFA, FRM
Times: Tuesday, Thursday 1:20 to 2:50 for section 001
Course Location: Swart Mac Computer Lab
Office Location: Clow Faculty 206
E-mail Address: HUFFMAN@uwosh.edu
Syllabus Contents
Course Goals and Course Expectations
Required Materials
 Course Outline and Dates (IMPORTANT--GO TO THIS LINK)
 Grading Criteria and Policies
 End of Chapter Questions
and Problems
(IMPORTANT—GO TO THIS LINK)
 Examples of Acts of Misconduct and Penalties
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Common Finance Course Assessment Objectives for BUS-432--Students will be able to:
·
·
·
Explain and apply basic concepts of finance,
Analyze and interpret financial data,
Demonstrate knowledge of investment management.
Learning objectives of this course are for each student to be able to:
 Obtain financial data from a variety of sources (print, web-based and other electronic data
sources),
 Organize, analyze and interpret financial data,
 Present financial analysis of data,
 Apply financial decision making models to solve problems and identify opportunities in
global financial markets.
Course Goals and Objectives:
The goal of this course is for each student to use his/her finance background to make decisions
related to managing an investment portfolio. The requirements for this course provide the
students with the opportunity to analyze securities and manage investment portfolios.
The specific objectives of this course are for each student to be able to:
· Obtain, compile, and review data related to the current investment environment for the
economy, market, assigned sector(s) and publicly traded company
· Review and implement a target asset allocation (e.g., type securities, size, sector, etc.)
· Execute the investment strategy (e.g., review and revise portfolio holdings)
· Analyze, value, and make recommendations (e.g., buy, hold, sell) for various securities
including: Fixed income securities, Common stocks, Mutual Funds, and Exchange Traded Funds
· Calculate and evaluate returns for each fund's portfolio and benchmark
· Use derivative securities to hedge the portfolio and to increase/decrease the systematic risk of
the portfolio, the interest rate risk of the portfolio, and the foreign exchange exposure of the
portfolio
· Prepare report documents and make presentations
.
BBA Learning Goals and how they are achieved in 432 course:
1.
Business Knowledge: Integration of functional areas
a.
Finance product development (e.g., index funds, ETFs, hedge funds, etc.)
b.
Promotion of financial products (e.g., insurance products and mutual fund
performance)
c.
Impact of financial data on investment decisions (e.g., calculate returns and risk
measures from price data obtained from a web site)
2.
Business Environment
a.
Diversity and Global Business Issues
i.
Cultural differences in investing (e.g., asset allocation)
ii.
Impact of foreign currency exchange rates on valuation
iii.
Importance of diversification on risk/return and value
iv.
Significance of global events (international agreements, wars, etc.)
b.
Business Environment—Ethics
i.
Impact of ethics on firm value (e.g., Enron)
ii.
Importance of internal controls (Nick Lessen of Barrings Bank (1995—
$1.3 billion loss) and Jerome Kerviel of Societe Generale (2008—-$7.16 billion loss))
iii. CFA Institute: The code of ethics and standards of professional
conduct
3.
Business Skills
a.
Communication Skills
i.
Students are required to discuss current articles in financial press
ii.
Required use of D2L discussion board to evaluate current investment
environment
b.
Project Management Skills
i.
Students complete a series of requirements during the course
c.
Analytical Thinking & Problem Solving Skills
i.
Assignments require students to gather data, organize the raw data, and
analyze data
d.
Interpersonal and Leadership Skills
i.
In-class exercises with current articles requires the group discussion
e.
Work Experience
i.
Students are penalized for unprofessional conduct (e.g., phone ringing)
Required Materials:
(1) Text: Reilly, Frank K. and Edgar A. Norton. Seventh Edition, Investments, (SouthWestern a division of Thomson Learning, 2006). (ISBN 0-324-28899-9) Soft cover is
okay.
Text's web site for update material is http://reilly.swcollege.com/
(2) I require that all 432 students subscribe to The Wall Street Journal (WSJ). Students are
eligible to subscribe at the special educational rate of $34.95 for 15 weeks. Go to the
link http://subscribe.wsj.com/semester to submit a WSJ subscription.
(3). Required subscriptions to Stock-Trak (trading begins February 8, 2010 and ends April 30,
2010). Students must register for these simulations using the following two web sites. The
first is for an actively traded portfolio for 12 weeks and up to 200 trades for a cost of
$26.95. You are also required to subscribe to a buy and hold (passive) portfolio with 20
trades and an additional cost of $6.00. Your total cost will be $32.95 (register for both
“courses”).
http://www.stocktrak.com/public/members/registrationstudents.aspx?p=432active10
http://www.stocktrak.com/public/members/registrationstudents.aspx?p=432buyhold10
(4) Financial Calculator: the student’s calculator should be able to make time value of money
computations. The student is responsible for knowing how to use a financial calculator.
(5) Handout Materials and Materials found on D2L web site: supplemental articles and
readings will be distributed in class or via e-mail/web site/D2L during the semester. Students
should check their e-mail prior to coming to class.
COURSE EXPECTATIONS
Students enrolled in this course are expected to have a basic understanding of:
·
Basic finance concepts (e.g., time-value-of-money, risk and return, bond valuation, net
present value, etc.—topics from BUS 331),
·
Fundamental business and economic concepts (e.g., types of business entities, marginal
cost, marginal revenue, etc.—topics from ECON 204 and ECON 206),
·
Accounting (BUS 204),
·
Mathematics (MATH 204 and MATH 206),
·
Statistics (ECON 210 and BUS 389),
·
Basic Investments (e.g., ETFs, mutual funds, stocks, bonds, derivatives, margins, short
selling, limit orders, stop-loss orders—topics from BUS 334)
Course work includes activities that require the use of a financial calculator and the use of
electronic spreadsheets (i.e., topics and skills from BUS 389). Assignments require that students
use Excel for: calculating descriptive statistics, finding minimums/maximums (using the add-in
solver), testing mean differences, performing regression analysis, and creating graphs/charts. In
addition, students will need to acquire skills in obtaining data from electronic data bases and/or
from the internet. Students who are not deficient in the areas mentioned above can expect to
spend at least 6 hours per week preparing for the course. Students who are deficient in one
or more areas mentioned above will need more time to prepare for class.
Security Analysis is NOT a remedial course. I do not issue extra credit to individuals. I
do not curve grades on individual quizzes or exams. I try to be fair and consistent when
administering the policies found in this syllabus. Students are expected to have read the syllabus
and to adhere to the policies found in it. As part of each student's course grade, I also will
subjectively evaluate each student's contribution to the class and evaluate his/her understanding
of the course material based on communication between the student and me.
Grading Policy
If a student does not agree with a grade, the student has two weeks from the posting of the grade
to contest it. For the final course grade, students have two weeks from the end of the semester to
contest the grade. After two weeks, I will not be willing to spend time with students to discuss
their final grade or their final exam (unless a documented reason for not having a conference
within the allotted period is provided). I will post course grades on TitanWeb. Students are
responsible for verifying that the scores recorded in D2L are correct—after two-weeks I will not
correct the recorded score.
A
A−
B+
B
B−
C+
Allocation of Letter Grades
Scores of 93% or higher
C
Scores from 73% to
77%
Scores from 90% to 92%
C−
Scores from 70% to
72%
Scores from 88% to 89%
D+
Scores of 69%
Scores from 83% to 87%
D
Scores from 66% to
68%
Scores from 80% to 82%
D−
Scores of 65%
Scores from 78% to
F
scores less than 65%
79%
Grading Criteria, Policy, and Tentative Dates:
Weighting
15%
10%
10%
5%
5%
Component
Exam 1
Exam 2
Exam 3
Group--Economic Analysis (4
groups)
Group--Market Analysis (6
Tentative Date(s)
March 17 or 18 in Testing Center (Day 14)
April 15 or 16 in Testing Center (Day 20)
May 13 in Class (location: CC 23) (Day 28)
Presentation and report, Feb 18, by noon (Day 6)
Presentation and report, March 4, by noon (Day
groups)
5%
1%
9%
Group--Sector Analysis (12
groups)
Individual Company
ValuationDRAFT
Individual Company Valuation
Project
5%
Company Analysis PowerPoint &
5 minute Presentation
10%
10 Weekly StockTrak Explanations
2%
2 minute Stock-Trak Presentation
10%
Final Stock-Trak Report
2%
Daily financial article discussion
1%
Daily market analysis discussion
2%
Attendance
8%
Contribution and
Professor’s subjective judgment
10)
6 Presentations on March 11 (Day 12)
Remaining 6 presentations and reports due
onMarch 16 (reports to D2L discussion, by noon,
Day 13)
April 8, due to D2L dropbox, by noon (Day 18)
April 22 due to D2L dropbox by noon (Day 22)
April 20or April 22 (Day 21 or 22)
PowerPoint presentation due to D2L discussion
area by noon
Each Tuesday beginning Feb 16 through April
27, by noon
May 4 and May 6 (Day 25 and 26) Power point
due by noon to D2L discussion
May 11 due to D2L dropbox, by noon (Day 27)
Each class period (2 per student during term)
beginning Feb 9, posted by noon on due date
Each class period (1 per student during term)
beginning Feb 9, posted by noon on due date
1/25th per class (4% per class, but each student
starts with 102%)
See below
Other Important dates:
No Class on March 18 (test in the Testing Center) and
No Class on April 15 (test in the Testing Center)
Examinations: Three exams are given during this course.
 A failing grade will be earned for a missed exam. NO MAKE-UP EXAMINATIONS
ARE GIVEN.
 Requests to take the exam early because of a legitimate conflict should be made at least
five week days prior to the scheduled exam date (however, students are NOT allowed
to use an index card when they take an exam outside of the regularly scheduled
time, no matter what the reason).
 The exams will consist of a combination of objective questions and short answer
questions.
 During the exams, students will be able to use a calculator, a foreign language dictionary
(if needed) and one 3"x5" index card.
 There are no restrictions on what can be on the 3"x5" index card (front and back are
permitted). The only rule is that the notes must be hand written and include the
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





student’s name. Computer generated or photocopied notes will be considered
cheating and will earn a zero on the exam.
Each student must turn in his/her index card along with all other exam materials. A
student’s failure to turn in his/her index card, with name written on it, will result in the
student being prohibited from using an index card on the next exam.
I reserve the right to disallow the use of the index card for an individual student, a course
section, or all students enrolled in the course. The following are examples of class events
that will result in revoking the use of an index card during an exam: phone ringing,
texting in class, leaving the class for no apparent reason, excessive talking to other
students during a lecture, lack of participation during lectures, reading material not
related to the class (especially the Bogle book), etc.
Students who turn in the wrong size index card will receive a 20 percentage point
deduction from their exam grade for the first offense, and will receive a zero on the exam
for the second or more offenses.
I reserve the right to inspect calculators for stored text, formulas and/or data.
Phones are NOT allowed to be used during exams (or other graded activities), even
if the student is just looking at the time (i.e., bring a watch).
I will deduct 5% (on a 100 point scale) from a student’s exam for each missing
name, student id or exam form letter on the scan sheet. I also will deduct 5% for
each missing name on an exam or index card. These point deductions
are notdebatable.
I also will deduct 1 point for each minute over the 90 minute time limit when taking
exams in the testing center. Students with documented special needs are exempt
from this penalty; however, they must provide documentation from the Dean of
Students.
I will have at least 110 points on each exam, which are graded on a 100 point
scale. The 10 extra points compensate for a number of issues, including: missing
class due to illness (lost points on an assignment and/or attendance), having points
deducted for missing name, etc., and a test question that may not seem to
correspond with the text or lecture.
Three Group Projects are required (15% of total grade). Each project requires a one page
executive report with citations and/or URLs (include key printouts) used to make predictions,
including a description of how the group arrived at the forecasted value. Each project requires a
brief presentation to the class. Group projects are turned in using the discussion area of D2L and
are available to all students in the course. A template is provided in the D2L discussion area for
each project.
All group projects are subject to moral hazard. On the due date of the group projects, I will ask
each student four questions about what was turned in and about the performance of the group
members. Specifically, 80% of a student’s grade is the group grade and 20% is from the in-class
questions. The in-class questions will be like the in-class questions I asked when I collected the
334 assignments last semester. If a student is absent on those dates, the most he/she can earn on
the group project is 80%.
1. Economic forecast--The assigned group forecasts the annual rate of growth for GDP for the
next year and the following 5 years. Specifically, the project requires that all groups make a
GDP forecast for the world economy and the assigned economy (US, Europe, Asia, Emerging
Markets). In addition to the GDP forecast, justification for the forecast should include
discussions about: political environment, regulatory environment, monetary policy, fiscal policy,
GDP components, inflation, interest rates (short-term and/or long-term), currency exchange
rates, and other relevant economic and non-economic factors. A template is provided in the
discussion area of D2L.
2. Market forecast—The assigned group forecasts the value of the S&P 500 for Friday, May 7,
for the end of the current year, plus forecasts for two additional (assigned) market indexes. The
group report justifies the forecasted values and includes discussions of market risk premium,
growth rates, and other relevant factors (e.g., liquidity). A template is provided in the discussion
area of D2L.
3. Sector forecast—The assigned group forecasts the growth and index value of the assigned
Morningstar sector for Friday, May 7, and the end of the current year. Key industry/sector issues
should be cited and used to support the forecasted value. A template is provided in the
discussion area of D2L.
Individual Company Valuation and Presentation (15% of total grade)
Each student selects a company from his/her assigned sector/industry to evaluate. The project
requires a format used by CFA Institute’s Global Investment Research Challenge (outline in the
next section). Each student will make a 5 minute presentation of his/her key findings and his/her
buy/sell/hold recommendation on April 20 or 22 (Day 21 and Day 22) and include a one page
summary of his/her stock in the discussion area of D2L in the appropriate sector, which is
required to be posted by April 20. All students (including those presenting) are required to pick
three stocks from the individual company presentations to purchase and one stock to short in
their active portfolio in Stock-Trak (for both days).
Outline of Individual Company Valuation Report
The objective of the valuation project and presentation is to value a company from the assigned
Morningstar sector that the student picks. The template for the report is from the CFA Institute’s
Global Research Challenge. The basic outline is as follows, where student discuss and analyze
of the topic as it relates to their company (and/or the industry/sector of their company) :
 Company Highlights
 Investment Summary (company style—size/value/growth)
 Valuation (models from chapter 15 including DCF, FFCE and PE models compared to
Morningstar Fair Market Value)
 Business Description
 Industry Overview and company’s competitive positioning, which includes a SWOT
and/or Porter analysis
 Financial Analysis (ratio analysis)
 Analysis of Investment Risks (Business, Financial, Systematic, Financial Statements)
 Summary/Conclusions

Sources of Information
4 to 5 Minute Individual Company Presentation
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
30 seconds—Company highlights and business description
30 seconds—Unique aspects of the company (e.g., new product) and/or stock (e.g., size
or growth/value)
1 minute—Current financial position and risk
1 minute—Current price and target price in 3 to 5 years
1 minute—Summary and explanation of recommendation (buy/hold/sell) and type of
investor who would benefit from a position in the company’s stock
Stock-Trak Project requires weekly trades, explanations, and a final report (22% of total
grade).
Two portfolios are tracked for each student. One portfolio is passively managed after the first
week, and the second portfolio is actively managed given weekly requirements. The portfolio
has a total return objective.
Week 1(trades from Feb 8 through Feb 12): Students purchase (broad index) ETFs to
construct a portfolio that is consistent with the following asset allocation guideline (at market
value). For the fixed income portion of the portfolio, students use a combination of Treasury
Bonds and fixed income ETFs (or ETNs). Limit the amount invested in only one ETF or ETN
to $100,000. Commodities can be purchased in the cash market (corn, wheat, gold, silver, and
major currencies) or using an ETF; however, the real estate exposure must be obtained using an
ETF on a broad real estate index. The passive and active portfolios should be established
with approximately the same holdings and weights (i.e., same trades and same returns
during the first week). I suggest placing these initial orders when the market is open (i.e., after
3 pm). The passive portfolio should not need to be adjusted during the remainder of the term.
Asset Class
U.S. Large Cap. Stocks
U.S. Small Cap. Stocks
Non-U.S. Stocks
Fixed Income
Real Estate
Commodities including
currencies
Cash and equivalents
Target
40%
10%
20%
20%
3%
Minimum
30%
0%
0%
15%
0%
Maximum
75%
25%
25%
60%
10%
3%
0%
10%
4%
0%
15%
Week 2 (trades from Feb 15 through Feb 19): Stops, shorting and buying on margin
1. For the active portfolio, establish at least three stop loss orders for the ETFs in the
existing portfolio (e.g., set the stop price at about 10% or more below the current price).
2.
Students establish a margin account by borrowing funds (i.e., in Stock-Trak, the
margin loan occurs automatically when more securities are purchased than the cash that
is available and/or by short selling). That is,
(a) buy additional shares of at least three ETFs in the existing portfolio (purchased in
the first week) and
(b) short sell a health care sector ETF. The sector ETF will reduce your exposure to
health care.
3. Target the active portfolio value to be at least $1,400,000.
Week 3 (trades from Feb 22 through Feb 26): Rebalancing and buying mutual funds,
levered ETF and an ultra-short ETF
1. Replace (i.e., sell) 20% of the large cap ETFs by purchasing an index mutual fund, and
sell 20% of the small cap ETF by buying an actively managed small cap mutual fund(s).
2.
Increase the systematic risk of U.S. securities by selling regular broad index ETF
and purchasing levered ETF like those from ProShares (e.g., Ultra S&P 500 with ticker
of SSO).
3. Reduce exposure to international equities by purchasing an Ultra-Short ETF like
those from ProShares (e.g., Ultrashort MSCI Japan with ticker of EWV).
Week 4 (trades from March 1 through March 5): Based on expectations of commodity
prices, currencies, and interest rates, establish futures positions in commodity, currency,
and bond (avoid purchasing a contract that is expiring in the current month).
1. Use futures contracts to increase (or decrease) the percent of commodities and non-U.S.
currencies in the active portfolio by at least 3% of the total value of the portfolio (e.g.,
if the current portfolio value is $1,500,000, then increase holding of a commodity by an
additional $45,000 based on the notional, or contract, value of the futures contract).
2.
Increase (or decrease) the interest rate risk of the active portfolio by using a bond index
futures by at least $100,000 in notional value. That is, buy T-bond futures to increase
interest rate risk and sell to reduce interest rate risk.
Week 5 (trades from March 8 through March 12): Futures transactions in equity
market and adjustments for sector weightings (avoid purchasing a contract that is expiring in
the current month)
1.
Based on expectations for the equity market, increase (or decrease) the systematic risk
of the portfolio by using index futures (by buying or selling equity index futures). If
the portfolio does not have sufficient cash for the margin required by the futures contract,
then shares of ETFs will need to be sold.
2.
Adjusting sector weighting, leveraging and buying short positions. Establish sector
over-weighting and under-weightings using ETFs or mutual funds in the portfolio for at
least two additional sectors. Students can reverse the health care position from prior
transaction.
Week 6 (trades from March 15 through March 19): Option returns versus stock returns
(Avoid purchasing a contract that is expiring in March)
1.
2.
3.
Purchase three individual stocks by selling the appropriate ETF(s).
For each stock, purchase an out-of-the-money call.
For each stock, purchase an in-the-money call.
This is not an option strategy; however, I will want comments in the final report on the
impact of buying an option compared to buying the individual stock (keep track of the
returns on the stock (include dividends) and call options). See D2L announcement note
for option symbol used in Stock-Trak.
Week 7 Spring Break: No required trades (from March 22 through March 26), but can
trade to rebalance
Week 8 (trades from March 29 through April 2): Basic Option Strategies
(see D2L home for an announcement related to option symbols)
1. Purchase two additional individual stocks (at least 100 shares) by selling the
appropriate ETF(s). For each stock, purchase a put option to establish a protective put
position.
2. Purchase two additional individual stocks (at least 100 shares) by selling the
appropriate ETF(s). For each stock, write a call option to establish a covered call
position.
3. Purchase a put option for one of the ETFs to establish a protective put position.
4. Sell a call option for one of the ETFs to establish a covered call position.
Week 9 (trades from April 5 through April 9): Advanced Option Strategies
1.
Establish a long straddle and a short straddle for two different stocks that are not
currently in the portfolio. A long straddle requires the simultaneous purchase of a call
and put for the same strike price, and a short straddle requires simultaneous writing of a
call and put for the same strike price.
2. For an individual stock not currently owned, create a Bull (or Bear) Money
Spread (go to trade options − spreads and buy a call and write a call, where the call
purchased has a lower strike price than the call that is sold).
3. Purchase 3 individual stocks (that are new to the portfolio). For each of the 3
stocks, create a collar. A collar is basically a protective put plus a short call option.
Alternatively, a collar can be thought of as a covered call with downside protection. For
each of the new stocks, buy an out-of-the-money put and an out-of-the money call for the
same expiration month. For example, immediately after purchasing a stock for $100, go
to trade option and then to combo and buy a put option with a strike price of $95, and
write a call option for $105.
Week 10 (trades from April 12 through April 16): Trade at least ten individual stocks, of
which at least two are from a foreign exchange and two additional securities are ADRS
trading on a U.S. exchange; otherwise, there are no restrictions beyond Stock-Trak’s margin
loans (trade as much as desired, but save enough transactions to close derivative positions and
short positions in Week 12).
Week 11 (trades from April 19 through April 23): After the in-class presentations, students
are required to:
·
Buy 3 and short sell 2 of the stocks that were presented on Tuesday, and
·
Buy 3 and short sel1 2 of the stocks that were presented on Thursday.
Begin to close derivative positions (especially those with low volume).
Week 12 (trades from April 26 through April 30): Rebalance the portfolio to be within the
asset allocation guidelines after closing all derivative positions and short positions (volume
may be an issue for closing some of these positions—try several times during the week for low
volume issues).
On Tuesday of each week, each student is required to turn in a summary and explanation of the
trading activity in the active portfolio for the prior week (1 or 2 brief paragraphs). The top 5
portfolios based on total portfolio value will receive 5 bonus points, and the bottom five will lose
5 points (this is to prevent excessive risk taking).
The Weekly Stock-Trak summaries are turned into the dropbox in D2L as a word file and
must contain the student’s name and indicate the report week (minus 5 points name or
report week, if missing). Each student summary requires (no image files or print screens):
·
·
·
·
an explanation of trades made,
a comparison of the returns of the active portfolio to the passive portfolio,
completion of the statement: “This week, the most important insight gained (or
technique learned) was . . . .” , and
proper citation of sources used in gathering the information used in the trade
decisions.
Stock-Trak Presentation
A two to three minute PowerPoint presentation is required (assigned for either day 25 or 26,
which is either May 4 or May 6). The presentation is due to a D2L dropbox on the presentation
day and will summarize each student’s trading over the 12 weeks with slides that describe (or
outline) the following:
·
Worst trade
·
Best trade
·
Most important insight gained from Stock-Trak
Final Stock-Trak Report
The final Stock-Trak report will include a discussion and analysis of the fund's performance by
comparing the active portfolio to the passive portfolio (and/or a major index). A summary of the
individual stock trades and their performance is required. Students with portfolios with open
positions in a derivative security will not be eligible for the bonus points.
Students with portfolios with open positions in a derivative security will not be eligible for the
bonus points, and will have 5 points deducted from their score.
Final Stock-Trak Report: The report is required to be in a research paper format, which is
organized using the following Template/outline and includes a discussion and analysis of
each of the following:
1. A comparison of daily returns of the active portfolio to the passive portfolio over the
trading period (downloads daily portfolio values from Stock-Trak to an Excel
spreadsheet, remove weekends, calculated daily returns).
a. Calculate and compare arithmetic and geometric means (daily and annualized).
b. Calculate and compare volatility measures; i.e., standard deviation (daily and
annualized), range, coefficient of variation.
c. Compare other characteristics of the return series (i.e., skewness and kurtosis).
d. Calculate and discuss the correlation between the active and passive portfolio
(does the correlation seem reasonable, given the trading in active portfolio?).
e. Regression of Active (y-axis variable) vs. Passive portfolio (x-axis
variable) returns.
1. Intercept: What is the intercept’s value and is the intercept significant at
the 5% level? Note: that the intercept is similar to the Jensen's alpha.
2. What is the value of the beta coefficient and its interpretation?
f. Calculate and compare the HPR over the trading period for the active and passive
portfolios to the S&P 500. Does the relationship seem reasonable given the risk
associated with each portfolio/index?
g. Are markets efficient, nearly efficient or inefficient? (justify the response based
on your trading)
2. A comparison of the holding period return of the three stocks that were purchased relative
to the three out-of-the money call options and the three in-the-money options on the same
stocks.
a. Total investments in each stock, out-of-the money call, in-the-money call (include
margin)
b. Total return on stock (include dividend if one was paid) and each call option
c. Compare the HPR on each stock and the corresponding options
d. Conclusions from options trades
3. Examples of impact of risk and return from the following trades:
a. Protective puts
b. Covered calls
c. Other option strategies
d. Use of futures contracts
4. What were the most important insights gained from the Stock-Trak simulation?
a. From your trading strategies (required and/or otherwise)
b. Market trends and conditions during the 12 weeks
c. Overall
5. Given the rules and quirks of Stock-Trak, how can the classroom experience be
enhanced?
Appendices should include:
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Data used in Excel spreadsheet (include arithmetic and geometric returns, daily means
and annualized means and standard deviations)
Chart of daily portfolio values of active versus passive portfolios
Chart of daily returns of active versus passive portfolios
Descriptive statistics of the daily returns
Regression output of daily returns of active versus passive portfolios
Daily Market Review. Each students is assigned a day to discuss the market performance from
the previous day (Monday’s markets on Tuesday, and Wednesday’s markets on
Thursday). Students should indicate the most important issue in the market and be prepared to
discuss the following: yields for the Treasury bills, notes and bonds, value of the dollar versus
the euro and yen, and value of the major equity market indices. Also, students should include:
· For the equity markets, the primary individual stock that had price changes, and
· Explanation that financial press is claiming to be the cause of the movement(s) in the
market.
Please indicate the source(s) of the information, and record the key information in the discussion
area of D2L for the day assigned.
Daily financial press articles--Students are assigned days to present: (1) key WSJ article, and
(2) key article from another source (other than WSJ). If a student misses his/her assigned
discussion day, then the most that he/she can earn on that day’s article discussion is 50% (the
student still is required to provide information in the discussion area of D2L, prior to discussion
date). The student is responsible for leading a discussion of the article in class (usually at the
beginning of class) and including in D2L the following (prior to discussion day):
(1) a brief one paragraph summary of the key points of the article (properly cited with title and
author, date and publication name),
(2) a sentence/paragraph that summaries the impact of the article on: risk and return or any of
the typical investment constraints (taxes, time horizon, legal or regulatory, liquidity, and unique
needs)
Contribution to the course and Instructor's Professional Evaluation: More than just
attending class is required for this portion of a student’s grade. Students are required to be
prepared and alert during all class meetings (this includes turning off cell phones and other
electronic devices). Students who arrive late for class and those who leave during class are
disruptive to the overall learning environment. Any lack of effort on any course requirement
or detraction to the learning environment will be reflected in the contribution grade. During
the semester, students may be required to turn in a self evaluation and/or a peer evaluation.
The contribution grade is the professor's subjective evaluation of how well a student knows
the course material and how the student used that knowledge to improve the learning
environment of all students. That is, did a student's participation in the course contribute to
the overall learning of all the students enrolled in the course?
Students can make a contribution to the course in a number of different ways, including:
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asking relevant questions about a course topic (e.g., how a topic relates to a current
event),
volunteering to answer questions from the professor addressed to the class,
correctly answering a question from the professor addressed to the student,
answering questions from other students addressed to the professor,
asking a relevant question about a course topic by e-mail or during the professor's office
hours,
providing the professor with a current article on a course topic, and
active participation in small group discussions
Contribution grades are not assigned until grades from all course requirements are
completed. I review the scores of each course requirement and my notes on what each
student did (or did not do) during class and determine the impact that the student had on the
class. I then make a subjective determination of each student’s contribution grade.
Prior to the last exam, I recommend that students use 60% as a proxy of their contribution
grade as a way to estimate what they need to earn on the last exam to receive a grade of “x."
Historically, the last exam of the semester has had the lowest score.
Attendance: A student’s attendance grade is based on the proportion of the non-exam classes
he/she attends. For example, for Tuesday/Thursday classes, there are 25 non-exam class
periods, or 4% for each class. I realize that issues do arise during the term; therefore, each
student will be issued 102 points (on a 100 point score scale) at the beginning of the
course. For example, if a student attends 22 classes (missed two classes), the student would
earn 94% (102 – 8) for the attendance portion of the overall grade.
During the spring 2008 term, 53% of my 334 students were at every class period. On a 100
point scale, the average exam grade of students with perfect attendance was 6.6% points
higher than students who missed one or more class periods (81.7% versus 75.1%,
respectively). The average GPA was 3.0 for those with perfect attendance, compared to 2.3
for those missing one or more classes (the maximum number of classes missed out of 25 was
6, and the median was 3). For the Spring 2009 term, 70.3% of the 334 students had perfect
attendance, and the course GPA was 3.0 (only 2 people missed more than 1 class). The 27%
of my Fall 2009 334 course with perfect attendance had an average GPA of 3.24, the 23% that
missed only one day had an average GPA of 2.49, while the remaining students who missed
more than one day had an average GPA of 2.35 (overall class average 2.61). Bottom
line: attendance matters.
Attending class and being prepared for class are important; however, students need to use
good judgment if they are sick or are traveling in dangerous situations. For a MWF
course, I deduct 2.5% (from 100% maximum) for each class period that is missed. That
is, missing one class period will decrease a student’s overall score by 0.05% (2.5%*0.02) for a
MWF course. For a TR course, missing one class will reduce a student’s overall score by
0.08% (4.0%*0.02). A student would have to miss 20 class periods to have an impact of 1%
on the overall score for a MWF course (or more than 12 for a TR course). Bottom
line: do not come to class if you are sick or if travel conditions put you in an unsafe
situation. Keep me informed via e-mail when you do miss class.
Class Requirements: It is essential that you come to class prepared in order to obtain full
benefit from the class discussions. I REQUIRE THAT STUDENTS BRING THEIR
TEXTBOOK TO CLASS EVERY DAY. Students will be asked regularly throughout the
semester to participate in the discussions concerning the class requirements and current
investment news. I have provided suggested end of the chapter questions, problems, etc. to help
you review the chapter material. These suggested questions and problems can be found by
linking to End of Chapter Questions and Problems. The solutions are available in the content
section of D2L.
Review of quizzes and exams:
Most of the testing instruments will not be reviewed in class or returned. However, exam or
quizzes are available for review in my office.
Academic Integrity:
The University of Wisconsin Oshkosh is committed to a standard of academic integrity for all
students. The system guidelines state: "Students are responsible for the honest completion and
representation of their work, for the appropriate citation of sources, and for respect of others’
academic endeavors." (s. UWS 14.01, Wisconsin Administrative Code). Students are subject to
disciplinary action for academic misconduct, which is defined in s. UWS 14.03, Wisconsin
Administrative Code.
Examples of acts of misconduct and penalties are provided at the following link:
Examples of Acts of Misconduct and Penalties
FINANCE CLUB
Students who are Juniors should be active in clubs related to their future careers. Clubs provide
opportunities to meet and interact with business professionals. Clubs provide an opportunity to
network. More information is available at UW Oshkosh College of Business | Student Clubs
FMA
INTERNSHIPS Watch the bulletin board outside the Dean's Office (CC 151) or the listing on
the web page. http://www.uwosh.edu/cob/future-students/undergraduate/careers
FINANCE MAJOR SCHOLARSHIPS
There are several scholarships available to finance majors. Notices of scholarship deadlines are
e-mailed to students. Scholarships usually are due in October/November. Check the finance team
web site: UW Oshkosh College of Business Scholarships
COLLEGE OF BUSINESS SCHOLARSHIPS
COB scholarships usually are awarded in the spring and can be found at UW Oshkosh College of
Business Scholarships
STUDENT-ENDOWMENT FUND MANAGER COURSE: BUS 438
BUS 438 is a 3.0 credit Finance Seminar that is offered each fall and spring semester. More
information is available at the web site: Student-Managed Endowment Fund Manager
Course or
http://www.uwosh.edu/cob/future-students/undergraduate/academics/majors/smef
The application is available at:
http://www.uwosh.edu/cob/current-students/438-application
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